Federal officials misappropriated millions earmarked for biomedical research: Investigation

HHS' inspector general conducted the investigation.

January 27, 2021, 6:01 PM

Over the last decade, federal officials misappropriated millions of dollars designated for biomedical research, including vaccine research, emergency preparedness for public health threats like Ebola, Zika -- and now, COVID-19 -- according to the findings from an investigation into a whistleblower complaint to the U.S. Office of Special Counsel, shared with ABC News.

PHOTO: A lab technician sorts blood samples inside a lab for a COVID-19 vaccine study at the Research Centers of America  in Hollywood, Fla., Aug. 13, 2020.
A lab technician sorts blood samples inside a lab for a COVID-19 vaccine study at the Research Centers of America in Hollywood, Fla., Aug. 13, 2020.
Chandan Khanna/AFP via Getty Images, FILE

The Health and Human Services Department's inspector general conducted the investigation, overseen by the Office of Special Counsel. The whistleblower, who chose to remain anonymous, alleged that the Office of the Assistant Secretary for Preparedness and Response tapped into those funds earmarked for scientific advancement under the Biomedical Advanced Research and Development Authority in the years leading up to the coronavirus pandemic -- dollars "intended for the development of public health countermeasures," -- and instead used them to pay for "myriad unrelated expenses, including the removal of office furniture, administrative expenses, news subscriptions, legal services, and the salaries of personnel who did not work for BARDA," the inspector general report found.

The practice of using funds from BARDA, part of the federal health department, for non-BARDA purposes was "so common, there was even a name for it within the agency: "Bank of BARDA," OSC's release said.

The report does not specify estimates for total funds misappropriated, but outlines allegations that those dollars had been incorrectly dipped into beginning in at least fiscal year 2010, and continuing through fiscal year 2019, spanning both the Trump and Obama administrations.

A health worker holds blood samples during clinical trials for a Covid-19 vaccine at Research Centers of America in Hollywood, Fla., Sept. 9, 2020.
Bloomberg via Getty Images, FILE

The investigation of ASPR's reporting to Congress from fiscal year 2007 to fiscal year 2016 also found that those reports "failed to account" for more than $517 million in administrative expenditures, adding that "ASPR is unable to demonstrate that the[se] BARDA funds were used for their appropriated purposes."

Copies of the report have been sent to Congress, and a letter has been transmitted to President Joe Biden and the office of the White House Counsel regarding the report's findings, according to a source familiar with the investigation.

In his letter to Biden, Kerner notes the report indicates "there is more work to be done," and that it contains evidence that as recently as fiscal year 2019, approximately $25 to $26 million was taken from BARDA's Advanced Research and Development programs and "improperly provided to ASPR."

Head of the Office of Special Counsel Henry Kerner testifies during a hearing before the House Oversight and Reform Committee at the Capitol, June 26, 2019.
Alex Wong/Getty Images, FILE

The inspector general concluded that ASPR had violated the Purpose Statute, a key federal guardrail to ensure funds appropriated by Congress are applied only toward their intended purpose and recipient. A further internal HHS review will now examine whether the agency's use of the funds may have violated an additional law guiding federal funds' use -- the Antideficiency Act. The health department has also hired an outside accounting firm to conduct an audit, Kerner wrote to Biden.

HHS also hired an external accounting firm to perform an audit of the agency’s use of ARD funds from fiscal years 2017 through 2019. This in addition to the internal review, which will cover fiscal years 2015 through 2019. Both should be – according to agency estimates – complete by summer of 2021.

Those findings are expected by the summer of 2021, Kerner said.

"I am deeply concerned about ASPR's apparent misuse of millions of dollars in funding meant for public health emergencies like the one our country is currently facing with the COVID-19 pandemic," Kerner wrote in his letter to Biden.

"Equally concerning is how widespread and well-known this practice appeared to be for nearly a decade. While I have determined that HHS's report contains the information required by statute and that its findings appear reasonable, I urge the agency to expediently follow through on its proposed remedial actions—including the additional audit work and any required reporting to Congress—as outlined in the agency's response to OSC."

ABC News has reached out to HHS for comment.

ABC News' Anne Flaherty contributed to this report.